Resource Sales to See New Tax In China

October 11, 2011 Taxation in China

Tax on Oil Sales in ChinaBEIJING – China is set to instate new taxes on the sale of oil and ore on the national market in a bid to boost tax revenues and incite a drive to green technology.

In a statement released on October 10th the State Council of China revealed that the government will soon implement a new set of resource taxes, aimed at the encouraging taxpayers to use more ecologically friendly technologies.

From November 1st 2011 the government will levy a tax of up to 10 percent on the sale of crude oil and natural gas on the local market of China. Cocking coal will also be subject to a tax of up to RMB 20 per ton, with other grades of coal seeing a maximum tax rate of RMB 5 per ton. Several other taxes will be introduced on the sale of a metal and non-metal ores produced in China.

The government has not yet released forecasts on the cumulative tax revenues that will be raised by the new measures. However, local energy industry analysts have estimated that tax revenues collected from the country’s three major oil companies alone would reach approximately up to RMB 44 billion per year.

The taxes will be levied and collected by the local governments of the area where the resources are sold. It is believed that the tax will greatly aid the financial positions of the local bodies, especially in poorer areas of China.
The new tax has already been implemented on an experimental basis in the oil-rich Xinjiang region in the June of 2010. The initial regional trial tax was deemed to have been a success by the State Council of China, and was later expanded to cover 12 more regions in the country.

According to the newly published statement the government will soon instate even further taxes on resource sales, although it did not specify any details.

Photo by Barrybar